This law creates a statutory right to paid annual holidays for workers, sets accrual and pay rules, requires employers to give notice and pay holidays in advance, and mandates employers pay out accrued untaken leave on termination. It preserves more favourable award/contract terms, limits contracting-out, and includes COVID‑period accrual protection. Employers must keep records, face inspection and penalties for non‑compliance, and may use limited close‑down or council‑specific arrangements; enforcement and recovery routes are provided for unpaid holiday pay.
The Annual Holidays Act 1944 establishes a statutory minimum entitlement to paid annual leave for workers in New South Wales. At its centre is s 3(1), which provides that, except as otherwise stated in the Act, every worker becomes entitled at the end of each year of employment to an annual holiday on ordinary pay. The length of that holiday is explicitly bifurcated by reference to the end date of the year of employment: three weeks where the year ends on or before 30 November 1974 (s 3(1)(a)), and four weeks where the year ends after that date (s 3(1)(b)). This apparently anachronistic distinction remains on the statute book and continues to govern the quantum for any residual pre-1975 service calculations.
The Act is prescriptive as to timing and manner of taking leave. Under s 3(4) the employer must give the holiday, and the worker must take it, before the expiration of six months after the right accrues. The Industrial Registrar or Deputy Industrial Registrar may approve a postponement in writing where circumstances render it necessary or desirable. Section 3(2) limits the manner in which the holiday may be taken: one consecutive period, or two periods of three weeks and one week, or (by agreement) two, three or four separate periods. Advance taking is permitted under s 3(3) before the entitlement has crystallised, but s 3(7) then defers the accrual of the next holiday until after the year in which the advance leave was taken has fully expired.
Payment mechanics are tightly regulated. Section 3(6)(b) requires the employer to pay the worker’s ordinary pay for the holiday period in advance before the leave commences. Section 3(6)(a) mandates at least one month’s notice of the commencement date. Where a public or special holiday falls during the annual holiday, s 3(8) automatically extends the annual holiday by one day for each such day.
Current sections
Direct links to the current provisions in Annual Holidays Act 1944.
(2) This Act shall commence upon a day to be appointed by the Governor and notified by proclamation published in the Gazette.
(3) This Act shall be read and construed subject to the Commonwealth of Australia Constitution Act, and so as not to exceed the legislative power of the State to the intent that where any provision of this Act, or the application thereof to any person or circumstance is held invalid, the remainder of this Act, and the application of such provision to other persons or circumstances shall not be affected.
2
Interpretation
2 Interpretation
2 Interpretation
(1) In this Act, unless the context otherwise indicates or requires—
Ordinary pay, in relation to any worker, means remuneration for the worker’s normal weekly number of hours of work calculated at the ordinary time rate of pay; and, where the worker is provided with board or lodging by his or her employer, includes the cash value of that board or lodging.
Week, in relation to any worker, means the worker’s ordinary working week.
Worker means person employed, whether on salary or wages or piecework rates, or as a member of a butty-gang, and the fact that a person is working under a contract for labour only, or substantially for labour only, or as lessee of any tools or other implements of production, or as an outworker, or is working as a salesperson, canvasser, collector, commercial traveller, insurance agent, or in any other capacity in which the person is paid wholly or partly by commission, shall not in itself prevent such person being held to be a worker.
(2) For the purposes of the definition of the term ordinary pay in subsection (1)—
(a) the term ordinary time rate of pay in the case of a worker who is remunerated in relation to an ordinary time rate of pay fixed by the terms of the worker’s employment means the time rate of pay so fixed for the worker’s work under the terms of the worker’s employment, including shift allowances relating to ordinary time and weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holidays, but does not include any other amount payable to the worker in respect of shift work, overtime or penalty rates, and where two or more time rates of pay are so fixed means the higher or highest of those rates,
(a1) where a worker is remunerated otherwise than in relation to an ordinary time rate of pay so fixed, or partly in relation to an ordinary time rate of pay so fixed and partly in relation to any other manner, or where no ordinary time rate of pay is so fixed for a worker’s work under the terms of the worker’s employment, the worker’s ordinary pay shall be deemed to be the average weekly wage earned by the worker during the period actually worked by the worker during the period of twelve months immediately preceding the annual holiday or, as the case may be, during the period of employment in respect of which a right to payment under section 4 (3) or under section 4A accrues.
For the purposes of this paragraph the average weekly wage earned by a worker shall be the average of the amounts received by the worker each week under the terms of the worker’s employment including shift allowances relating to ordinary time and weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holiday, and excluding any other amount payable to the worker in respect of shift work, overtime or penalty rates,
(a2) where during the period of twelve months immediately preceding the annual holiday or, as the case may be, during the period of employment in respect of which a right to payment under section 4 (3) or under section 4A accrues the worker has received under the terms of the worker’s employment, any amount under any bonus, incentive or other similar scheme (other than any amount taken into consideration in assessing an average weekly wage in terms of paragraph (a1)) the worker’s ordinary pay shall be increased by a further sum namely the sum which the worker would have received each week in respect of such bonus, incentive or other similar scheme had such amount been paid by equal weekly payments throughout that period,
(b) where no normal weekly number of hours is fixed for a worker under the terms of the worker’s employment, the normal weekly number of hours of work shall be deemed to be the average weekly number of hours worked by the worker during the applicable period referred to in paragraph (a1),
(c) the cash value of any board or lodging provided for a worker shall be deemed to be its cash value as fixed by or under the terms of the worker’s employment or, if it is not so fixed, shall be computed at the rate of three dollars, or such greater sum as may be prescribed in lieu thereof, a week for board and one dollar, or such greater sum as may be prescribed in lieu thereof, a week for lodging.
(3) Notwithstanding anything contained in subsection (2) (a1) or (a2), for the purposes of the definition of the term ordinary pay in subsection (1), where a worker is remunerated partly in relation to an ordinary time rate of pay fixed by the terms of the worker’s employment and partly in relation to a bonus, incentive or other similar scheme, the worker’s ordinary pay shall be deemed to be the sum of—
(a) the worker’s weekly remuneration at the ordinary time rate of pay so fixed at the commencement of the annual holiday or, as the case may be, at the end of the period of employment in respect of which a right to payment under section 4 (3) or section 4A, accrues,
(b) the average of the amounts received by the worker each week in respect of the bonus, incentive or other similar scheme—
(i) during the period actually worked by the worker during the twelve months immediately preceding the commencement of the worker’s annual holiday, or
(ii) during the period of employment in respect of which a right to payment under section 4 (3) or section 4A accrues,
as the case may be, and
(c) shift allowances relating to ordinary time and weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holiday,
but excluding any other amounts paid to the worker in respect of shift work, overtime or penalty rates.
(4) For the purposes of subsections (2) (a1), (2) (b) and (3), in computing the period actually worked by a worker no regard shall be had to any period during which, on account of illness or injury, the worker was temporarily assigned to duties or work entitling the worker to payment of wages lower than the wages the worker would have received had the worker not been assigned to those duties or that work on that account, unless the worker was assigned to those duties or that work during the whole of the period actually worked by the worker.
(5) Notwithstanding the provisions of subsection (2) (a), (2) (a1) or (3), where by any award or agreement a worker is entitled to shift allowances relating to ordinary time or weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holiday or to an annual holiday loading, whichever is the greater, the ordinary time rate of pay or the ordinary pay, as the case may be, of that worker shall not, in respect of any annual holiday to which the worker is entitled under this Act, include those allowances and penalties.
(6) Despite anything to the contrary in this section, the ordinary pay of a worker is not to include or be increased by the amounts paid under any bonus, incentive or other similar scheme if the annual amount of the worker’s ordinary pay (excluding any amounts so paid) exceeds the amount prescribed by the regulations for the purposes of this subsection.
s 2: Am 1964 No 31, sec 2 (a); 1967 No 50, sec 2; 1969 No 37, Second Sch; 1970 No 44, sec 2; 1974 No 97, sec 2 (a); 1983 No 91, Sch 2 (1); 1990 No 113, Sch 2; 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [1] [2]; 2000 No 61, Sch 1.
3
Annual holidays with pay
3 Annual holidays with pay
3 Annual holidays with pay
(1) Except as otherwise provided in this Act, every worker shall at the end of each year of the worker’s employment by an employer become entitled to an annual holiday on ordinary pay.
Such annual holiday shall—
(a) where any such year of employment ends upon or before 30 November 1974, be of three weeks,
(b) where any such year of employment ends after 30 November 1974, be of four weeks.
(2) An annual holiday shall be given and taken either in one consecutive period or two periods which shall be of three weeks and one week respectively, or if the worker and the employer so agree, in either two, three or four separate periods and not otherwise.
(3) If the worker and the employer so agree, the annual holiday or any of such separate periods may be taken wholly or partly in advance before the worker has become entitled to the annual holiday.
(4) The annual holiday shall be given by the employer and shall be taken by the worker before the expiration of a period of six months after the date upon which the right to such holiday accrues: Provided that the giving and taking of the whole or any separate period of such annual holiday may, with the consent in writing of the Industrial Registrar, or Deputy Industrial Registrar appointed under the Industrial Relations Act 1996, be postponed for a period to be specified by such Registrar in any case where he or she is of opinion that circumstances render such postponement necessary or desirable.
(5) Except as provided in section 4 or section 4A, payment shall not be made by an employer to a worker in lieu of any annual holiday or part thereof to which the worker is entitled under this Act nor shall any such payment be accepted by the worker.
(6)
(a) The employer shall give each worker at least one month’s notice of the date from which the worker’s annual holiday shall be taken.
(b) The employer shall pay each worker in advance before the commencement of the worker’s annual holiday, the worker’s ordinary pay for the holiday period.
(7) Where the annual holiday or any part thereof has been taken before the right to the annual holiday has accrued the right to a further annual holiday shall not commence to accrue until after the expiration of the year of employment in respect of which the annual holiday or part has been so taken.
(8) Where any special or public holiday for which the worker is entitled to payment under any Act, award or agreement or under the worker’s contract of employment, occurs during any period of an annual holiday taken by a worker under this section, the period of the holiday shall be increased by one day in respect of that special or public holiday.
s 3: Am 1958 No 28, sec 2 (a); 1964 No 31, sec 2 (b); 1967 No 50, sec 3 (a); 1974 No 97, sec 2 (b); 1983 No 91, Sch 2 (2); 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [2].
4
Holiday pay where holiday is not taken
4 Holiday pay where holiday is not taken
4 Holiday pay where holiday is not taken
(1) Where the employment of a worker who has become entitled to one or more annual holidays provided by this Act is terminated, the employer shall be deemed to have given the holiday or holidays (except so much, if any, as has already been taken) to the worker as from the date of termination of the employment, and shall forthwith pay to the worker, in addition to all other amounts due to the worker, the worker’s ordinary pay for the period of the holiday or holidays.
(2) Subsection (1) applies to and in respect of an annual holiday (except so much, if any, as has already been taken) whether or not the worker concerned continues to be entitled (apart from this section) to take it, and so applies as if the worker’s right to take it had accrued immediately before the date of the termination of the worker’s employment.
(2A) Nothing in subsection (1) or (2) affects the obligation of an employer to give, or a worker to take, annual holidays in accordance with section 3.
(3)
(a) This subsection applies with respect to every period of employment of a worker by any employer which is less than one year, such period being computed from the date of the commencement of the employment or (where the worker has during the employment become entitled to any annual holiday or holidays under section 3) computed from the date upon which the worker became entitled to that annual holiday, or to the last annual holiday, as the case may be.
(b) Where the employment of any worker by any employer is terminated at the end of a period of employment to which this subsection applies, the employer shall forthwith pay to the worker, in addition to all other amounts due to the worker, an amount—
(i) where that period of employment ends upon or before 30 November 1974, equal to three forty-ninths of the worker’s ordinary pay for that period of employment,
(ii) where that period of employment ends after 30 November 1974, equal to one twelfth of the worker’s ordinary pay for that period of employment.
(4) Where the annual holiday under section 3 or any part thereof has been taken in advance by a worker pursuant to subsection (3) of that section, and
(a) the employment of the worker is terminated before the worker has completed the year of employment in respect of which such annual holiday or part was taken, and
(b) the sum paid by the employer to the worker as ordinary pay for the annual holiday or part so taken in advance exceeds the sum which the employer is required to pay to the worker under subsection (3) of this section,
the employer shall not be liable to make any payment to the worker under subsection (3) of this section, and shall be entitled to deduct the amount of such excess from any remuneration payable to the worker upon the termination of the employment.
s 4: Am 1958 No 28, sec 2 (b); 1974 No 97, sec 2 (c); 1984 No 31, sec 2.
4A
Annual close-down
4A Annual close-down
4A Annual close-down
(1)
(a) In this section—
Period of employment means the period during which a worker is employed by an employer referred to in subsection (2), being a period computed—
(a) where the worker has not during the employment with that employer become entitled to any annual holiday under section 3, from the date of commencement of the employment with that employer, or
(b) where the worker has during the employment with that employer become entitled to any annual holiday or holidays under section 3, from the date upon which the worker last became entitled to an annual holiday,
up to the commencement of the specified period affecting that worker.
Specified period means the period specified by an employer pursuant to subsection (2).
(b) This section, subsections (2) and (3) excepted, shall apply only to a worker to whom notice has been given pursuant to this section.
(c) Subsections (2) and (3) of section 3 shall not apply to a worker to whom notice has been given pursuant to this section.
(2) Subject to subsection (3), an employer may give notice to a worker employed in any part of the employer’s establishment that, during a period specified when giving that notice, that establishment or part will be temporarily closed (or reduced to a nucleus) for the purposes of giving an annual holiday or leave without pay to the workers to whom such notice has been given.
(3) Notice pursuant to subsection (2)—
(a) shall be given to a worker not less than one month before the commencement of the specified period or, in the case of a worker who commences employment less than one month before the commencement of the specified period, on the day the worker commences employment, and
(b) shall not be given by an employer more than once in any calendar year.
(4) Where, immediately before the commencement of the specified period, a worker is not entitled under section 3 to any holiday—
(a) the worker shall be given and shall take leave without pay for the specified period, and
(b) the worker shall, in addition, be paid—
(i) three forty-ninths of the worker’s ordinary pay for the worker’s period of employment where the specified period commences upon or before 30 November 1974, and one twelfth of the worker’s ordinary pay where the specified period commences after that date, and
(ii) the worker’s ordinary pay for any special or public holiday, during the period of the worker’s leave without pay, for which the worker would be entitled to payment under any Act, award or agreement or under the worker’s contract of employment.
(5) Where, immediately before the commencement of the specified period, a worker is under section 3 entitled to a holiday of a duration less than that of the specified period—
(a) the worker shall be given and shall take the whole of that holiday during the specified period,
(b) the worker shall be given and shall take leave without pay for the balance of the specified period, and
(c) the worker shall, in addition, be paid the amounts referred to in subsection (4) (b).
(6) Where, immediately before the commencement of the specified period, a worker is under section 3 entitled to a holiday of a duration not less than that of the specified period—
(a) the worker shall, on and from the commencement of the specified period, be given and shall take the whole of that holiday, or
(b) where the worker and the employer so agree, the worker shall, on and from the commencement of the specified period, be given and shall take part of his or her holiday for a period not less than the specified period and postpone the taking of the balance of his or her holiday until a time to be agreed upon between the worker and the employer.
(7) Where payment has been made to a worker pursuant to subsection (4) or (5) the worker shall be deemed—
(a) to have completed a year of employment for the purposes of this Act immediately before the commencement of the specified period, and
(b) to have been given the whole of the annual holiday to which the worker would be entitled for that year of employment.
s 4A: Ins 1967 No 50, sec 3 (b). Am 1974 No 97, sec 2 (d); 1983 No 91, Sch 2 (3).
4B
Protection of annual holiday entitlements on transfer of business
4B Protection of annual holiday entitlements on transfer of business
4B Protection of annual holiday entitlements on transfer of business
Part 8 of Chapter 2 of the Industrial Relations Act 1996 applies for the purposes of determining a worker’s entitlements under this Act when the worker is employed by an employer as a result of the transfer of business (within the meaning of that Part) to that employer from another employer on or after the commencement of this section.
s 4B: Ins 1997 No 26, Sch 1.1.
5
Special provisions—annual holidays otherwise than under this Act
5 Special provisions—annual holidays otherwise than under this Act
5 Special provisions—annual holidays otherwise than under this Act
(1) The following provisions shall apply in every case where provision is made by an award, agreement or contract of employment for annual holidays or annual leave for any worker—
(a) where the worker is entitled under such provision to any benefit that is more favourable to the worker than the benefits provided by section 3, section 4 or section 4A, as the case may be, that section shall not apply to the worker,
(b) where the worker is entitled under any such provision to any benefit that is not more favourable to the worker than the benefits provided by section 3, section 4 or section 4A, as the case may be, that section shall apply to the worker and no benefit shall be allowed to the worker under that provision in respect of any period of employment after the commencement of this Act in the case of a benefit not more favourable than that provided by section 3 or section 4 or, after the commencement of the Annual Holidays (Amendment) Act 1967, in the case of a benefit not more favourable than that provided by section 4A.
(1A) Where provision is made by or under any Act, other than this Act or the Industrial Relations Act 1996, for annual holidays or annual leave for any worker, sections 3 and 4 shall not apply to such worker.
(2) Where, under any award or agreement, provision is made for the granting to a worker who is a seven-day shift worker and is required to work regularly on Sundays and public holidays of a holiday in addition to that granted to other workers under such award or agreement or where, under any award or agreement, provision is made for the payment of a sum of money as an annual holiday loading—
(a) such additional holiday or such payment, as the case may be, shall not be regarded as a benefit under that award or agreement for the purposes of subsection (1), and
(b) the right of the worker to such additional holiday or such payment, as the case may be, shall not be affected by anything contained in this Act.
s 5: Am 1958 No 28, sec 2 (c); 1967 No 50, sec 3 (c); 1969 No 37, Second Sch; 1974 No 97, sec 2 (e); 1983 No 91, Sch 2 (4); 1989 No 79, Sch 1; 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [2].
5A
COVID-19 pandemic—protection of annual holiday entitlements
5A COVID-19 pandemic—protection of annual holiday entitlements
5A COVID-19 pandemic—protection of annual holiday entitlements
(1) The annual holidays of a worker who is stood down by an employer without pay during the prescribed period as a direct or indirect result of the COVID-19 pandemic continue to accrue while the worker is stood down during that period.
(2) This section extends to annual holidays or annual leave under an award, agreement or contract of employment or any other Act.
(3) In this section—
prescribed period means the period—
(a) starting on 25 March 2020, and
(b) ending on—
(i) 30 September 2021, or
(ii) a later day, not later than 31 March 2022, prescribed by the regulations.
s 5A: Ins 2020 No 5, Sch 1.1[1]. Am 2021 No 5, Sch 1.1.
6
Commencement of employment
6 Commencement of employment
6 Commencement of employment
The employment of a worker employed at the date of the commencement of this Act shall be deemed, for the purposes of this Act, to have commenced on that date.
7
Worker in employment at commencement of Act
7 Worker in employment at commencement of Act
7 Worker in employment at commencement of Act
(1) Where provision is made by or under any Act, other than this Act, or by any award, agreement or contract of employment in force at the commencement of this Act, for an annual holiday for any worker who is in employment at such commencement, and the worker has not at such date completed the qualifying period of employment which would entitle the worker to such annual holiday, the worker shall be entitled to receive an annual holiday of a period which bears the same proportion to the period of annual holiday specified in that provision as the portion of such qualifying period during which the worker has been employed immediately before the commencement of this Act bears to the whole of such qualifying period.
(2) Where provision is made by or under any Act, other than this Act, or by any award, agreement or contract of employment in force at the commencement of this Act for an annual holiday for any worker who is in employment at such commencement, and the worker has before such commencement become entitled under that provision to such annual holiday but has not taken the same, the worker’s right to such annual holiday shall not be affected by anything contained in this Act.
8
Contracting out prohibited
8 Contracting out prohibited
8 Contracting out prohibited
(1) The provisions of this Act shall have effect notwithstanding any stipulation to the contrary whether made before or after the commencement of this Act.
(2) No contract or agreement made or entered into either before or after the commencement of this Act shall operate to annul or vary or exclude any of the provisions of this Act.
9
Employers to keep holiday record
9 Employers to keep holiday record
9 Employers to keep holiday record
Every employer shall keep or cause to be kept a holiday record in a form approved by the Minister for a period of at least 6 years after the last entry therein.
s 9: Am 1983 No 91, Sch 1 (1); 1992 No 34, Sch 1.
10
Powers of inspectors
10 Powers of inspectors
10 Powers of inspectors
(1) Every inspector shall have power at any reasonable times—
(a) to enter, inspect and examine the premises of any employer or any premises in which the inspector has reasonable cause to believe that any person is employed,
(b) to require an employer to produce, at such time and place as the inspector may specify, the holiday record required to be kept under this Act,
(c) to make such examination and inquiry as may be necessary to ascertain whether the provisions of this Act have been complied with,
(d) to exercise all other powers that may be necessary to ensure the carrying out of the provisions of this Act.
(2) No inspector shall have any authority under this Act to enter those portions of a building which are used exclusively for the purposes of a private dwelling.
(3) Where a worker claims that an employer has not paid the full amount of any remuneration or payment which has become due to the worker under this Act, an inspector may, by notice in writing served personally or by post, require the employer to deliver or to send by post to the inspector, within such time and to such place as are specified in the notice—
(a) a copy of such specified part of the holiday record required to be kept under this Act, and
(b) such other information of a specified kind relating to that remuneration or payment,
as the inspector considers necessary in order to investigate the claim.
(4) A public servant authorised in that behalf by the Under Secretary of the Department of Industrial Relations may exercise the power conferred on an inspector by subsection (3).
s 10: Am 1983 No 91, Sch 1 (2).
10A
Disclosure of information
10A Disclosure of information
10A Disclosure of information
(1) Subject to subsection (2), a person who is, or was at any time, an inspector or a public servant authorised under section 10 (4) shall not disclose any information relating to any manufacturing or commercial secrets or working processes and obtained by the person in connection with the administration or execution of this Act or the regulations made thereunder.
(2) Subsection (1) does not operate to prevent the disclosure of information where that disclosure is—
(a) made in connection with the administration or execution of this Act or the regulations made thereunder,
(b) made with the prior permission of the Minister, or
(c) ordered by a court, or by any other body or person authorised by law to examine witnesses, in the course of, and for the purpose of, the hearing and determination by that court, body or person of any matter or thing.
(3) The Minister may grant the permission referred to in subsection (2) (b) only if the Minister is satisfied that to do so would be in the public interest.
s 10A: Ins 1976 No 54, sec 4. Am 1983 No 91, Sch 1 (3).
11
Penalty
11 Penalty
11 Penalty
(1) Every person who contravenes or fails to comply in any respect with any provision of this Act shall be liable to a penalty not exceeding 10 penalty units.
(2) Every person who—
(a) makes any false or misleading statement in, or any material omission from, any holiday record which the person is required to keep, or
(b) obstructs any inspector in the exercise of the inspector’s powers under this Act, or
(c) fails to comply with any requirement or direction lawfully given by an inspector under this Act or to furnish any information lawfully demanded under this Act by an inspector,
shall be liable to a penalty not exceeding 10 penalty units.
(3) In this section, inspector includes a public servant authorised under section 10 (4).
s 11: Am 1980 No 184, sec 3 (a); 1983 No 91, Sch 1 (4); 1992 No 112, Sch 1.
12
Proceedings for recovery of penalties
12 Proceedings for recovery of penalties
12 Proceedings for recovery of penalties
(1) Proceedings for the recovery of a penalty under this Act are to be taken before the Local Court or before the Industrial Relations Commission in Court Session and may be taken by—
(a) an inspector, or
(b) the secretary of an industrial organisation whose members are engaged in the industry concerned, or
(c) a person whose rights are impaired.
(2) In any such proceedings the Local Court or Industrial Relations Commission in Court Session may, in addition to the imposition of any penalty, make such an order with respect to any remuneration or payment due to a worker under this Act as might have been made in proceedings taken under section 13. Such order may be made without motion and shall be a bar to further proceedings under section 13 in respect of such remuneration or payment.
(3) In any proceedings under this section the Local Court or Industrial Relations Commission in Court Session before which such proceedings are taken may award costs to either party and assess the amount of such costs.
(4) (Repealed)
(5) The prosecutor may conduct the case personally or by an Australian legal practitioner or an agent duly authorised by the prosecutor in writing.
s 12: Am 1964 No 31, sec 2 (c); 1983 No 91, Sch 2 (5); 1991 No 17, Sch 1; 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [3]; 1997 No 147, Sch 2.2; 2001 No 121, Sch 2.12 [1]; 2005 No 98, Sch 3.3; 2007 No 94, Sch 2; 2016 No 48, Sch 2.1 [1]; 2023 No 41, Sch 2.1[1].
13
Recovery of holiday pay
13 Recovery of holiday pay
13 Recovery of holiday pay
(1) Any worker may apply to the Local Court, or to the Industrial Relations Commission in Court Session, for an order directing the employer to pay to the worker the full amount of any remuneration or payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 18 months before the date of assent to the Annual Holidays (Amendment) Act 1980.
The Local Court or Industrial Relations Commission in Court Session may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.
(1A) (Repealed)
(2) A worker may take any such proceedings and may recover any such moneys due, and costs, notwithstanding the fact that the worker has not reached the age of twenty-one years.
(3) In any case where the worker is a person employed to do any work for which the price or rate has been fixed by an award or agreement, proceedings under this section may, with the consent in writing of the worker, be taken by the secretary or other officer of an industrial organisation of employees registered under the Industrial Relations Act 1996, concerned in the industry to which such award or agreement relates, in the name and on behalf of the worker.
Any amount ordered to be paid in proceedings under this subsection may be paid to such secretary or other officer and the receipt of such secretary or other officer shall be a sufficient discharge to the employer for the amount mentioned in the receipt.
Any amount so paid to such secretary or other officer (less any costs properly incurred in connection with the proceedings and not paid by the employer) shall be held on trust for the worker on whose behalf the proceedings were taken.
s 13: Am 1964 No 31, sec 2 (d); 1980 No 184, sec 3 (b); 1983 No 91, Sch 2 (5); 1986 No 8, sec 2; 1991 No 17, Sch 1; 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [2] [3]; 2001 No 121, Sch 2.12 [2]; 2007 No 94, Sch 2; 2016 No 48, Sch 2.1 [2]; 2023 No 41, Sch 2.1[2].
14
Provisions as to enforcement of orders, appeals etc
14 Provisions as to enforcement of orders, appeals etc
14 Provisions as to enforcement of orders, appeals etc
(b) the making of an order for the payment of interest on an amount of money, and
(c) an application for, and enforcement of, an order for the payment of money or interest on an amount of money, and
(d) an appeal from, or the stating of a case by, the Local Court to the Industrial Relations Commission in Court Session,
apply to proceedings under this Act for the recovery of a penalty or the payment of money or interest on an amount of money.
s 14: Am 1983 No 91, Sch 2 (6); 1991 No 17, Sch 1. Subst 1991 No 34, Sch 3. Am 1996 No 121, Sch 4.3 [2] [3]; 2007 No 94, Sch 2; 2016 No 48, Sch 2.1 [3]; 2023 No 41, Sch 2.1[3].
14A
Annual holidays for local council workers
14A Annual holidays for local council workers
14A Annual holidays for local council workers
(1) This section—
(a) applies to a worker who is an employee of any of the following under the Local Government Act 1993—
(i) a council,
(ii) a county council,
(iii) a joint organisation, and
(b) prevails to the extent of any inconsistency with any other provision of this Act.
(2) Payment in lieu of annual holidays Despite section 3(5), an employer and worker may agree to a payment in lieu of a period of annual holiday to which the worker is entitled under this Act.
(3) An employer and worker may agree to a payment under subsection (2) only if—
(a) after the payment, the worker will have an accrued annual holiday entitlement of not less than 4 weeks, and
(b) the payment in lieu of a period of annual holiday is not less than the worker’s ordinary pay for that period.
(4) Annual holidays at half pay or double pay Despite section 3, an employer and worker may agree to the worker taking a specified period of annual holiday at double pay or at half pay.
(5) An employer and worker may agree on a worker taking a specified period of annual holiday at double pay only if, after taking the holiday, the worker will have an accrued annual holiday entitlement of not less than 4 weeks.
(6) For the purposes of this section—
(a) a worker takes a specified period of annual holiday at double pay if the worker—
(i) redeems the specified period of accrued annual holiday entitlement, and
(ii) takes leave for half that specified period of time, and
(iii) is paid during that period of leave at twice the worker’s ordinary pay, and
(b) a worker takes a specified period of annual holiday at half pay if the worker—
(i) redeems the specified period of accrued annual holiday entitlement, and
(ii) takes leave for twice that specified period of time, and
(iii) is paid during that period of leave at half the worker’s ordinary pay.
s 14A: Ins 2020 No 5, Sch 1.1[2]. Am 2020 No 30, Sch 1.2.
15
Regulations
15 Regulations
15 Regulations
(1) The Governor may make regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed or which are necessary or convenient to be prescribed for carrying out or giving effect to this Act.
(2) Such regulations may impose a penalty not exceeding 0.5 penalty unit for any breach thereof.
(3) (Repealed)
s 15: Am 1983 No 91, Sch 2 (7); 1987 No 48, Sch 32; 1992 No 112, Sch 1.
Source text: opening excerpt
Sourced from legislation.nsw.gov.au, CC BY 4.0.
1 Name of Act, commencement and construction
1 Name of Act, commencement and construction
1 Name of Act, commencement and construction
(1) This Act may be cited as the Annual Holidays Act 1944.
(2) This Act shall commence upon a day to be appointed by the Governor and notified by proclamation published in the Gazette.
(3) This Act shall be read and construed subject to the Commonwealth of Australia Constitution Act, and so as not to exceed the legislative power of the State to the intent that where any provision of this Act, or the application thereof to any person or circumstance is held invalid, the remainder of this Act, and the application of such provision to other persons or circumstances shall not be affected.
2 Interpretation
2 Interpretation
2 Interpretation
(1) In this Act, unless the context otherwise indicates or requires—
Agreement means an enterprise agreement within the meaning of the Industrial Relations Act 1996.
Award means an award within the meaning of the Industrial Relations Act 1996.
Employer means any person employing any worker or workers and includes the Crown.
Inspector means an inspector appointed under the Industrial Relations Act 1996.
Ordinary pay, in relation to any worker, means remuneration for the worker’s normal weekly number of hours of work calculated at the ordinary time rate of pay; and, where the worker is provided with board or lodging by his or her employer, includes the cash value of that board or lodging.
Week, in relation to any worker, means the worker’s ordinary working week.
Worker means person employed, whether on salary or wages or piecework rates, or as a member of a butty-gang, and the fact that a person is working under a contract for labour only, or substantially for labour only, or as lessee of any tools or other implements of production, or as an outworker, or is working as a salesperson, canvasser, collector, commercial traveller, insurance agent, or in any other capacity in which the person is paid wholly or partly by commission, shall not in itself prevent such person being held to be a worker.
The Act addresses the common situation where employment terminates before leave is taken. Section 4(1) deems the employer to have given any untaken holiday as at the termination date and requires immediate payment of ordinary pay for that period in addition to all other termination amounts. Subsection (2) makes clear that this obligation survives even if the worker would not otherwise have been entitled to take the leave at that moment. For periods of employment of less than one full year, s 4(3) imposes a pro-rata payment: three forty-ninths of ordinary pay for periods ending on or before 30 November 1974, and one twelfth thereafter. Section 4(4) prevents double-dipping where advance leave has already been taken and the pro-rata payout would otherwise exceed the amount already paid.
Section 4A introduces a distinct annual close-down regime. An employer may give not less than one month’s notice (or on the day of commencement for late hires) that the establishment or part of it will close for a specified period. Subsections (4)–(6) then prescribe three mutually exclusive outcomes depending on the worker’s accrued entitlement immediately before closure: leave without pay plus pro-rata payment where no entitlement exists; consumption of the existing entitlement plus leave without pay for the balance; or full consumption of the entitlement (or agreed postponement of any excess). Once payment under s 4A(4) or (5) is made, the worker is deemed to have completed a full year and to have taken the entire holiday for that year (s 4A(7)). Importantly, s 4A(1)(c) disapplies the splitting and advance-leave rules in s 3(2) and (3) for workers covered by a close-down notice.
The definition of “ordinary pay” in s 2 is the most technically dense part of the statute. It begins as “remuneration for the worker’s normal weekly number of hours of work calculated at the ordinary time rate of pay” and, where board or lodging is provided, includes its cash value. Section 2(2) then supplies four distinct methodologies:
(a) where an ordinary time rate is fixed by the contract, that rate including ordinary-time shift allowances and weekend penalties but excluding overtime and other penalties; the higher or highest rate applies if two or more exist;
(a1) where no fixed ordinary time rate exists, or remuneration is mixed, the average weekly wage actually earned over the preceding twelve months (or the period of employment), again including only ordinary-time shift and weekend penalties;
(a2) an uplift for any bonus, incentive or similar scheme not already captured in the average, calculated as if the bonus had been paid in equal weekly instalments;
(b) where no normal weekly hours are fixed, the average weekly hours worked during the relevant twelve-month or employment period.
Section 2(3) supplies a composite rule for workers paid partly at a fixed ordinary time rate and partly by bonus: the sum of the fixed weekly rate at the relevant date, the average bonus received, and ordinary-time shift/weekend penalties. Subsection (4) excludes from the averaging period any time spent on lower-paid duties because of illness or injury unless that was the worker’s entire pattern of work. Subsection (5) prevents double-counting where an award or agreement already provides the greater of annual leave loading or the relevant shift/weekend penalties. Subsection (6) imposes a salary cap: if ordinary pay (excluding bonus amounts) already exceeds the regulated threshold, no bonus component is added.
Protections against contracting out are absolute. Section 8(1) gives the Act paramountcy over any contrary stipulation whenever made, and s 8(2) voids any contract or agreement that annuls, varies or excludes the Act’s provisions. Section 5 governs the interaction with more generous award, agreement or contractual provisions, applying the Act only where the alternative benefit is not more favourable and preventing any lesser benefit from being claimed for post-commencement service. Section 5(1A) excludes the operation of ss 3 and 4 where another statute (other than the Industrial Relations Act 1996) itself provides for annual holidays.
Two modern overlays expand the Act’s reach. Section 5A, inserted in 2020, ensures that annual holidays continue to accrue for any worker stood down without pay during the prescribed COVID-19 period (25 March 2020 to 30 September 2021 or such later date not beyond 31 March 2022 as prescribed). It applies to leave under this Act, awards, agreements, contracts or any other statute. Section 14A, also inserted in 2020, applies exclusively to local government workers under the Local Government Act 1993 and prevails over any inconsistency. It permits agreement to payment in lieu provided the worker retains at least four weeks’ accrued entitlement, and permits taking leave at double pay (redeeming the entitlement but taking half the time at twice ordinary pay) or half pay (taking twice the time at half ordinary pay), again subject to retaining four weeks after the transaction.
Record-keeping, inspection and enforcement complete the scheme. Section 9 requires every employer to keep an approved holiday record for at least six years. Section 10 confers entry, inspection, record-production and information-gathering powers on inspectors (and certain authorised public servants). Section 10A restricts disclosure of manufacturing or commercial secrets obtained in the course of administration. Breaches attract penalties of up to 10 penalty units (s 11), with proceedings available in the Local Court or the Industrial Relations Commission in Court Session (s 12). Workers may recover unpaid amounts within a six-year window (subject to an 18-month backdating limit from the 1980 amending Act) under s 13, and s 14 applies the recovery, interest, enforcement and appeal provisions of the Industrial Relations Act 1996. Section 4B imports the transfer-of-business continuity rules in Part 8 of Chapter 2 of the Industrial Relations Act 1996.
In short, the Act does not merely create an entitlement; it supplies an exhaustive code for quantum, timing, payment, close-downs, termination payouts, interaction with other instruments, record-keeping and enforcement, all built around the conceptually intricate notion of “ordinary pay”.
Who it affects
The Act casts a wide net. “Worker” is defined in s 2(1) to mean any person employed, whether on salary, wages, piecework, as a member of a butty-gang, under a contract for labour only (or substantially for labour only), as lessee of tools, as an outworker, or as a salesperson, canvasser, collector, commercial traveller, insurance agent or in any other capacity paid wholly or partly by commission. The breadth is deliberate: the definition expressly states that the fact a person works under any of those arrangements “shall not in itself prevent such person being held to be a worker”. “Employer” is correspondingly broad: any person employing any worker or workers and includes the Crown (s 2(1)).
The Act therefore covers the vast majority of employer–employee relationships in New South Wales, including public sector employees, pieceworkers, commission-only sales staff and outworkers. It does not, however, apply universally. Section 5(1A) excludes workers for whom another statute (other than the Industrial Relations Act 1996) itself makes provision for annual holidays. Section 5(1) displaces the Act’s operation where an award, agreement or contract confers a more favourable benefit. Section 14A limits its own application to local government employees under the Local Government Act 1993 while granting them additional flexibilities.
Inspectors appointed under the Industrial Relations Act 1996, the Industrial Registrar, Deputy Industrial Registrar, and certain authorised public servants are also directly affected in their regulatory roles (ss 10, 10A, 12). Industrial organisations of employees registered under the Industrial Relations Act 1996 may bring recovery proceedings on behalf of workers with written consent (s 13(3)) and may themselves prosecute breaches (s 12(1)(b)).
The Act binds the Crown as employer but contains no general exemption for Crown employees; their entitlements are therefore identical to those of private-sector workers unless displaced by another statute. Section 6 deems employment of any worker already employed at the Act’s original commencement to have begun on that date for the purposes of the Act, while s 7 contains transitional rules preserving accrued but untaken leave and pro-rating incomplete qualifying periods under pre-existing instruments.
Finally, the 2020 amendments extended the Act’s protective reach to workers stood down without pay during the COVID-19 prescribed period (s 5A) and carved out a special regime for local council, county council and joint-organisation employees (s 14A). In each case the affected class is defined by cross-reference to other statutes rather than by the Act’s own definitional machinery.
Key duties and rights
Employers’ duties are both positive and negative. The core positive duty is to give and pay for the annual holiday required by s 3(1). Payment must be made in advance at ordinary pay (s 3(6)(b)), after at least one month’s notice (s 3(6)(a)). On termination, the employer must calculate and pay out untaken leave under s 4(1) or the pro-rata amount under s 4(3), and must do so “forthwith” and “in addition to all other amounts due”. During a close-down, the employer must give the requisite notice (s 4A(3)), pay the amounts prescribed by s 4A(4)(b) or (5)(c), and treat the worker as having completed the year (s 4A(7)). Employers must keep an approved holiday record for six years (s 9) and must produce it and furnish information when lawfully required by an inspector (s 10(1)(b), (3)).
Negative duties include the prohibition on payment in lieu except as expressly permitted by s 14A for local government workers (contrast s 3(5)), the prohibition on contracting out (s 8), and the obligation not to obstruct inspectors or furnish false records (s 11(2)).
Workers’ rights mirror these duties. The right to four weeks (or three weeks for pre-1975 years) on ordinary pay accrues at the end of each year of employment (s 3(1)). The worker may take the leave in the permitted configurations (s 3(2)) and may, by agreement, take it in advance (s 3(3)). Where a public or special holiday falls during leave, the worker is entitled to an extra day (s 3(8)). On termination the worker has an immediate right to payout (s 4). During a close-down the worker must take the leave or leave without pay as directed but receives the prescribed pro-rata or full payment (s 4A(4)–(6)).
Section 5A gives workers who are stood down without pay during the COVID-19 prescribed period the right to continued accrual. Local government workers enjoy additional rights to agree to cash-outs or half-pay/double-pay leave provided they retain four weeks’ balance (s 14A(2)–(5)).
Both parties share the right to agree to splitting of leave into up to four periods (s 3(2)) or to postponement with Registrar approval (s 3(4)). Workers have the right to recover unpaid amounts in the Local Court or Industrial Relations Commission in Court Session within the six-year window (s 13), and may authorise their union to sue on their behalf (s 13(3)). Costs may be awarded in enforcement proceedings (ss 12(3), 13(1)).
The definition of ordinary pay in s 2(1)–(6) is itself a rights-creating provision: it determines the quantum of every payment made under the Act and therefore directly shapes the value of every worker’s entitlement and every employer’s liability. The exclusions in s 2(5) and the cap in s 2(6) operate to limit that quantum in defined circumstances.
Penalties and enforcement
Section 11(1) imposes a maximum penalty of 10 penalty units on any person who contravenes or fails to comply with any provision of the Act. Subsection (2) applies the same maximum to specific aggravating conduct: false or misleading statements or material omissions in holiday records, obstruction of inspectors, failure to comply with lawful requirements or directions, or failure to furnish demanded information. “Inspector” for penalty purposes expressly includes authorised public servants exercising s 10(3) powers (s 11(3)).
Proceedings for recovery of penalties may be brought by an inspector, the secretary of a relevant industrial organisation, or a person whose rights are impaired (s 12(1)). They are heard in the Local Court or the Industrial Relations Commission in Court Session. In addition to any penalty, the court or Commission may make orders for payment of remuneration or interest that could have been made under s 13, and such an order bars further s 13 proceedings (s 12(2)). Costs may be awarded and assessed (s 12(3)). The prosecutor may appear personally, by Australian legal practitioner or by authorised agent (s 12(5)).
Section 13 provides a parallel civil recovery route for workers. A worker (or, with written consent, the secretary of the relevant industrial organisation) may apply to the Local Court or Industrial Relations Commission in Court Session for an order directing payment of any remuneration or payment that became due during the six years immediately preceding the application, but not earlier than 18 months before the assent date of the Annual Holidays (Amendment) Act 1980. The court or Commission may make any order it thinks just and award costs. Minors may sue and recover in their own name (s 13(2)).
Section 14 applies the machinery provisions of the Industrial Relations Act 1996—recovery of penalties, interest orders, enforcement of money orders, and appeals from the Local Court—to proceedings under the Annual Holidays Act. This creates a consistent procedural regime across industrial legislation.
Section 10 supplies the investigative infrastructure. Inspectors may enter premises (except private dwellings), demand production of records, examine and inquire, and exercise all necessary powers. They may also issue written notices requiring production of records and information to investigate worker claims for underpayment (s 10(3)). Authorised public servants may exercise the notice power (s 10(4)). Section 10A restricts disclosure of commercial secrets obtained in the course of these functions, with narrowly drawn exceptions for administration of the Act, ministerial permission granted in the public interest, or court order.
The combined effect is a dual-track system of criminal penalties (maximum 10 penalty units) and civil recovery, supported by inspection and record-keeping obligations, with procedural matters largely outsourced to the Industrial Relations Act 1996 framework.
How it interacts with other laws
The Act is expressly subordinate to the Commonwealth Constitution (s 1(3)) and is to be read so as not to exceed State legislative power, with a standard severability clause. Its most important interaction is with the Industrial Relations Act 1996. Definitions of “agreement”, “award” and “inspector” are imported directly from that statute (s 2(1)). Enforcement, recovery, interest, costs and appeal provisions are applied wholesale by s 14. Part 8 of Chapter 2 of the Industrial Relations Act 1996 is incorporated by reference in s 4B to determine continuity of annual holiday entitlements on transfer of business. Industrial organisations registered under the Industrial Relations Act 1996 are empowered to prosecute and to bring recovery proceedings.
Section 5 is the principal interaction rule with awards, agreements and contracts. Where such an instrument confers a benefit more favourable than ss 3, 4 or 4A, the Act does not apply; where the benefit is not more favourable, the Act applies and the lesser benefit is disallowed for post-commencement service (with a later cut-off for s 4A benefits after the 1967 amending Act). Additional holidays or annual leave loadings for seven-day shift workers are expressly disregarded when comparing favourability (s 5(2)), preserving those entitlements irrespective of the Act.
Section 5(1A) carves out cases where another statute (other than the Industrial Relations Act 1996) itself makes provision for annual holidays; in those cases ss 3 and 4 of the Annual Holidays Act simply do not apply. Section 14A(1)(b) gives the local government provisions paramountcy over any inconsistent provision of the Annual Holidays Act itself.
The COVID-19 provision in s 5A(2) expressly extends to annual holidays or annual leave under awards, agreements, contracts or any other Act, ensuring uniformity of accrual protection during the prescribed period.
Section 7 preserves entitlements arising under pre-existing awards, agreements or contracts that were in force at the Act’s original commencement, whether or not the qualifying period had then been completed. Section 6 deems commencement-date employment to have begun on that date for the purposes of the Act.
Finally, the penalty and procedural provisions interact with the general penalty unit regime and with the Local Court and Industrial Relations Commission’s respective jurisdictions. Because the maximum penalty has not been updated since the shift to penalty units, its real value is now modest, leaving civil recovery under s 13 as the primary remedial route in most cases.
Recent changes and why
Although the statute’s foundational text dates from 1944, its current form reflects layered amendments that respond to industrial, economic and public-health developments. The shift from three to four weeks in s 3(1)(b) and the parallel adjustment of pro-rata rates in ss 4(3) and 4A(4), effected by the 1974 amending Act, aligned New South Wales minimum standards with emerging community expectations of longer paid leave. The 1967 insertion of the close-down regime (s 4A) addressed the practical need for coordinated industry or establishment shut-downs, particularly in manufacturing, while protecting pro-rata payments.
The 1996–1997 amendments inserted cross-references to the then-new Industrial Relations Act 1996, replaced older industrial court references with the Industrial Relations Commission in Court Session, and added s 4B to protect continuity on business transfers. These changes were part of a broader harmonisation of industrial legislation and implementation of transfer-of-business protections.
The most recent substantive insertions—ss 5A and 14A—were enacted in 2020. Section 5A was a direct response to the COVID-19 pandemic. By ensuring continued accrual during stand-downs without pay, it prevented workers from losing leave entitlements at the very moment economic uncertainty made paid leave most valuable. The prescribed period (originally to 30 September 2021, extendable to 31 March 2022) was deliberately time-limited yet capable of regulatory extension. Section 14A responded to long-standing calls from local government for greater flexibility in managing accrued leave balances. By permitting cash-outs and half-pay or double-pay arrangements (subject to retaining four weeks), it gave employers and employees tools to manage cash flow and workforce planning while preserving the statutory minimum balance. Both 2020 provisions prevail over earlier text where inconsistent, illustrating Parliament’s readiness to overlay targeted solutions on the 1944 foundation without wholesale repeal.
Each change has been grafted onto the existing structure rather than replacing it, preserving the Act’s conceptual architecture while expanding its practical utility.
Court challenges and controversies
The Act itself contains no recital of decided cases, but its enforcement provisions presuppose litigation in defined forums. Section 12(1) and s 13(1) confer jurisdiction on the Local Court and the Industrial Relations Commission in Court Session. Section 14 applies the appeal and case-stating mechanisms of the Industrial Relations Act 1996, so that points of law may be taken from the Local Court to the Commission in Court Session. The broad definition of “worker” in s 2(1) has historically generated disputes about whether particular commission-only or labour-hire arrangements fall inside or outside the Act; the inclusive wording and the statement that certain arrangements “shall not in itself prevent” a person being a worker indicate a legislative intention to resolve such borderline cases in favour of coverage.
Controversies have also arisen around the calculation of “ordinary pay”. The multiple averaging rules in s 2(2)(a1)–(a2) and the composite rule in s 2(3), together with the exclusions for overtime, penalties and, in some cases, bonuses, have produced disputes about which components of remuneration survive into the holiday pay base. The salary cap in s 2(6) (introduced by amendment) was a deliberate legislative response to concerns that very high earners could inflate holiday pay through large incentive payments. The interaction provision in s 5 has led to litigation comparing the value of award loadings against the statutory four-week entitlement.
The close-down regime in s 4A has been controversial in industries with seasonal or cyclical production; employers value the ability to coordinate leave, but workers have contested whether the notice requirements were met or whether the pro-rata calculation correctly excluded certain periods under s 2(4). The 2020 COVID-19 accrual protection in s 5A generated immediate questions about its interaction with stand-down clauses in enterprise agreements and whether “direct or indirect result of the COVID-19 pandemic” could be established in borderline economic downturns.
Section 14A’s local government flexibilities have raised questions about whether agreements to cash out or take leave at half or double pay must be recorded in writing, whether the four-week balance test is assessed immediately after the transaction or at the end of the leave year, and whether the section’s paramountcy overrides more restrictive award clauses. Because the Act channels recovery through the industrial jurisdiction, most controversies are resolved in the Commission rather than superior courts, limiting the volume of reported appellate authority. Nevertheless, the dense drafting of s 2 and the layered exceptions continue to generate contested interpretations before the Commission.
Gotchas
Most practitioners assume the four-week entitlement is straightforward; few realise that the Act still maintains the pre-1975 three-week quantum for any historical service calculations and that the 30 November 1974 cut-off continues to dictate which pro-rata fraction (three forty-ninths or one twelfth) applies to incomplete years. The ordinary-pay definition is a minefield: the casual reader misses that s 2(5) can wholly exclude shift allowances and weekend penalties where an award already grants the greater of those amounts or annual leave loading. Subsection (6) silently removes bonus components once ordinary pay exceeds the (unindexed) regulatory threshold—an easily overlooked cap that can produce windfall reductions for senior employees.
Section 4A close-down notices can only be given once per calendar year; many employers discover too late that an ill-timed notice exhausts the option for the remainder of the year. The notice must be given to each individual worker; a general plant notice is insufficient. The COVID-19 accrual rule in s 5A is not confined to this Act; it overlays every award, agreement and contract, yet its prescribed period is capable of regulatory extension—creating a moving target for accrual calculations in 2021–22.
Local government employers using s 14A must ensure the worker retains four weeks after the cash-out or altered-pay transaction; an agreement that leaves the worker with exactly four weeks at the start of the next year will breach the test. The “redeems … and takes leave for half that specified period” language in s 14A(6)(a) is counter-intuitive: the worker is effectively selling half the leave at double rate, yet the entitlement is extinguished in full. Because s 14A prevails over the rest of the Act, the general prohibition on payment in lieu in s 3(5) is displaced, but only for local government workers—creating a two-tier system that can surprise employers with mixed workforces.
Finally, the six-year record-keeping obligation in s 9, combined with the six-year recovery window in s 13 (subject only to the 1980 backdating limit), means that a failure to keep compliant records can expose an employer to liability for underpayments that are almost impossible to disprove. The Act’s definition of worker is so wide that many businesses misclassify commission-only contractors as non-covered, only to discover years later that inspectors can still pursue them through the broad “person employing any worker” language.
How to comply
Compliance begins with accurate classification. Every person meeting the s 2(1) worker definition must be tracked for annual holiday accrual. Maintain a holiday record in the Minister-approved form for at least six years, recording commencement dates, accrual dates, ordinary-pay calculations, leave taken, close-down notices and termination payouts. For ordinary-pay purposes, decide at the outset which s 2(2) or (3) methodology applies; document the twelve-month averaging period, exclude overtime and non-ordinary penalties, apply the s 2(4) illness-adjustment rule where relevant, and check the s 2(6) cap. Where an award or agreement exists, perform a favourability comparison under s 5 before assuming the Act applies.
Issue written notices of leave dates at least one month in advance and pay ordinary pay in advance of the leave. If splitting leave, ensure the periods comply with s 3(2) or are supported by explicit agreement. For close-downs, issue individual notices no more than once per calendar year and at least one month before commencement (or on the first day for new hires); calculate and pay the exact s 4A(4) or (5) amounts and treat the worker as having completed the year.
On termination, apply s 4(1) or (3) immediately, using the correct fraction and the ordinary-pay methodology current at the termination date. Where advance leave has been taken, apply the set-off in s 4(4). For business transfers, apply the continuity rules imported by s 4B from the Industrial Relations Act 1996. During any COVID-19 stand-down within the prescribed period, continue to accrue leave and record it.
For local government employers, obtain written agreements before any cash-out or half-pay/double-pay arrangement; calculate the post-transaction balance to confirm at least four weeks remain, and document the redemption and altered pay rate. Never pay in lieu for non-local-government workers except as expressly permitted.
Train managers on the prohibition against contracting out. Respond promptly to inspector notices under s 10(3). If a dispute arises, calculate the exact amount claimed under s 13 and consider consenting to union proceedings to simplify administration. Keep separate files for pre-1975 and post-1974 service where any employee spans the cut-off date. Regularly review the regulated amount in s 2(6) and any bonus schemes to ensure the ordinary-pay cap is applied correctly. Finally, because the Act cross-references the Industrial Relations Act 1996 for enforcement and transfer rules, maintain compliance systems that integrate both statutes so that one set of records satisfies both record-keeping and continuity obligations.
Section 4BProtection of annual holiday entitlements on transfer of business
(2) For the purposes of the definition of the term ordinary pay in subsection (1)—
(a) the term ordinary time rate of pay in the case of a worker who is remunerated in relation to an ordinary time rate of pay fixed by the terms of the worker’s employment means the time rate of pay so fixed for the worker’s work under the terms of the worker’s employment, including shift allowances relating to ordinary time and weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holidays, but does not include any other amount payable to the worker in respect of shift work, overtime or penalty rates, and where two or more time rates of pay are so fixed means the higher or highest of those rates,
(a1) where a worker is remunerated otherwise than in relation to an ordinary time rate of pay so fixed, or partly in relation to an ordinary time rate of pay so fixed and partly in relation to any other manner, or where no ordinary time rate of pay is so fixed for a worker’s work under the terms of the worker’s employment, the worker’s ordinary pay shall be deemed to be the average weekly wage earned by the worker during the period actually worked by the worker during the period of twelve months immediately preceding the annual holiday or, as the case may be, during the period of employment in respect of which a right to payment under section 4 (3) or under section 4A accrues.
For the purposes of this paragraph the average weekly wage earned by a worker shall be the average of the amounts received by the worker each week under the terms of the worker’s employment including shift allowances relating to ordinary time and weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holiday, and excluding any other amount payable to the worker in respect of shift work, overtime or penalty rates,
(a2) where during the period of twelve months immediately preceding the annual holiday or, as the case may be, during the period of employment in respect of which a right to payment under section 4 (3) or under section 4A accrues the worker has received under the terms of the worker’s employment, any amount under any bonus, incentive or other similar scheme (other than any amount taken into consideration in assessing an average weekly wage in terms of paragraph (a1)) the worker’s ordinary pay shall be increased by a further sum namely the sum which the worker would have received each week in respect of such bonus, incentive or other similar scheme had such amount been paid by equal weekly payments throughout that period,
(b) where no normal weekly number of hours is fixed for a worker under the terms of the worker’s employment, the normal weekly number of hours of work shall be deemed to be the average weekly number of hours worked by the worker during the applicable period referred to in paragraph (a1),
(c) the cash value of any board or lodging provided for a worker shall be deemed to be its cash value as fixed by or under the terms of the worker’s employment or, if it is not so fixed, shall be computed at the rate of three dollars, or such greater sum as may be prescribed in lieu thereof, a week for board and one dollar, or such greater sum as may be prescribed in lieu thereof, a week for lodging.
(3) Notwithstanding anything contained in subsection (2) (a1) or (a2), for the purposes of the definition of the term ordinary pay in subsection (1), where a worker is remunerated partly in relation to an ordinary time rate of pay fixed by the terms of the worker’s employment and partly in relation to a bonus, incentive or other similar scheme, the worker’s ordinary pay shall be deemed to be the sum of—
(a) the worker’s weekly remuneration at the ordinary time rate of pay so fixed at the commencement of the annual holiday or, as the case may be, at the end of the period of employment in respect of which a right to payment under section 4 (3) or section 4A, accrues,
(b) the average of the amounts received by the worker each week in respect of the bonus, incentive or other similar scheme—
(i) during the period actually worked by the worker during the twelve months immediately preceding the commencement of the worker’s annual holiday, or
(ii) during the period of employment in respect of which a right to payment under section 4 (3) or section 4A accrues,
as the case may be, and
(c) shift allowances relating to ordinary time and weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holiday,
but excluding any other amounts paid to the worker in respect of shift work, overtime or penalty rates.
(4) For the purposes of subsections (2) (a1), (2) (b) and (3), in computing the period actually worked by a worker no regard shall be had to any period during which, on account of illness or injury, the worker was temporarily assigned to duties or work entitling the worker to payment of wages lower than the wages the worker would have received had the worker not been assigned to those duties or that work on that account, unless the worker was assigned to those duties or that work during the whole of the period actually worked by the worker.
(5) Notwithstanding the provisions of subsection (2) (a), (2) (a1) or (3), where by any award or agreement a worker is entitled to shift allowances relating to ordinary time or weekend penalties relating to ordinary time the worker would have worked on days other than public holidays if the worker had not been on annual holiday or to an annual holiday loading, whichever is the greater, the ordinary time rate of pay or the ordinary pay, as the case may be, of that worker shall not, in respect of any annual holiday to which the worker is entitled under this Act, include those allowances and penalties.
(6) Despite anything to the contrary in this section, the ordinary pay of a worker is not to include or be increased by the amounts paid under any bonus, incentive or other similar scheme if the annual amount of the worker’s ordinary pay (excluding any amounts so paid) exceeds the amount prescribed by the regulations for the purposes of this subsection.
s 2: Am 1964 No 31, sec 2 (a); 1967 No 50, sec 2; 1969 No 37, Second Sch; 1970 No 44, sec 2; 1974 No 97, sec 2 (a); 1983 No 91, Sch 2 (1); 1990 No 113, Sch 2; 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [1] [2]; 2000 No 61, Sch 1.
3 Annual holidays with pay
3 Annual holidays with pay
3 Annual holidays with pay
(1) Except as otherwise provided in this Act, every worker shall at the end of each year of the worker’s employment by an employer become entitled to an annual holiday on ordinary pay.
Such annual holiday shall—
(a) where any such year of employment ends upon or before 30 November 1974, be of three weeks,
(b) where any such year of employment ends after 30 November 1974, be of four weeks.
(2) An annual holiday shall be given and taken either in one consecutive period or two periods which shall be of three weeks and one week respectively, or if the worker and the employer so agree, in either two, three or four separate periods and not otherwise.
(3) If the worker and the employer so agree, the annual holiday or any of such separate periods may be taken wholly or partly in advance before the worker has become entitled to the annual holiday.
(4) The annual holiday shall be given by the employer and shall be taken by the worker before the expiration of a period of six months after the date upon which the right to such holiday accrues: Provided that the giving and taking of the whole or any separate period of such annual holiday may, with the consent in writing of the Industrial Registrar, or Deputy Industrial Registrar appointed under the Industrial Relations Act 1996, be postponed for a period to be specified by such Registrar in any case where he or she is of opinion that circumstances render such postponement necessary or desirable.
(5) Except as provided in section 4 or section 4A, payment shall not be made by an employer to a worker in lieu of any annual holiday or part thereof to which the worker is entitled under this Act nor shall any such payment be accepted by the worker.
(6)
(a) The employer shall give each worker at least one month’s notice of the date from which the worker’s annual holiday shall be taken.
(b) The employer shall pay each worker in advance before the commencement of the worker’s annual holiday, the worker’s ordinary pay for the holiday period.
(7) Where the annual holiday or any part thereof has been taken before the right to the annual holiday has accrued the right to a further annual holiday shall not commence to accrue until after the expiration of the year of employment in respect of which the annual holiday or part has been so taken.
(8) Where any special or public holiday for which the worker is entitled to payment under any Act, award or agreement or under the worker’s contract of employment, occurs during any period of an annual holiday taken by a worker under this section, the period of the holiday shall be increased by one day in respect of that special or public holiday.
s 3: Am 1958 No 28, sec 2 (a); 1964 No 31, sec 2 (b); 1967 No 50, sec 3 (a); 1974 No 97, sec 2 (b); 1983 No 91, Sch 2 (2); 1991 No 34, Sch 3; 1996 No 121, Sch 4.3 [2].
4 Holiday pay where holiday is not taken
4 Holiday pay where holiday is not taken
4 Holiday pay where holiday is not taken
(1) Where the employment of a worker who has become entitled to one or more annual holidays provided by this Act is terminated, the employer shall be deemed to have given the holiday or holidays (except so much, if any, as has already been taken) to the worker as from the date of termination of the employment, and shall forthwith pay to the worker, in addition to all other amounts due to the worker, the worker’s ordinary pay for the period of the holiday or holidays.
(2) Subsection (1) applies to and in respect of an annual holiday (except so much, if any, as has already been taken) whether or not the worker concerned continues to be entitled (apart from this section) to take it, and so applies as if the worker’s right to take it had accrued immediately before the date of the termination of the worker’s employment.
(2A) Nothing in subsection (1) or (2) affects the obligation of an employer to give, or a worker to take, annual holidays in accordance with section 3.
(3)
(a) This subsection applies with respect to every period of employment of a worker by any employer which is less than one year, such period being computed from the date of the commencement of the employment or (where the worker has during the employment become entitled to any annual holiday or holidays under section 3) computed from the date upon which the worker became entitled to that annual holiday, or to the last annual holiday, as the case may be.
(b) Where the employment of any worker by any employer is terminated at the end of a period of employment to which this subsection applies, the employer shall forthwith pay to the worker, in addition to all other amounts due to the worker, an amount—
(i) where that period of employment ends upon or before 30 November 1974, equal to three forty-ninths of the worker’s ordinary pay for that period of employment,
(ii) where that period of employment ends after 30 November 1974, equal to one twelfth of the worker’s ordinary pay for that period of employment.
(4) Where the annual holiday under section 3 or any part thereof has been taken in advance by a worker pursuant to subsection (3) of that section, and
(a) the employment of the worker is terminated before the worker has completed the year of employment in respect of which such annual holiday or part was taken, and
(b) the sum paid by the employer to the worker as ordinary pay for the annual holiday or part so taken in advance exceeds the sum which the employer is required to pay to the worker under subsection (3) of this section,
the employer shall not be liable to make any payment to the worker under subsection (3) of this section, and shall be entitled to deduct the amount of such excess from any remuneration payable to the worker upon the termination of the employment.
s 4: Am 1958 No 28, sec 2 (b); 1974 No 97, sec 2 (c); 1984 No 31, sec 2.
4A Annual close-down
4A Annual close-down
4A Annual close-down
(1)
(a) In this section—
Period of employment means the period during which a worker is employed by an employer referred to in subsection (2), being a period computed—
(a) where the worker has not during the employment with that employer become entitled to any annual holiday under section 3, from the date of commencement of the employment with that employer, or
(b) where the worker has during the employment with that employer become entitled to any annual holiday or holidays under section 3, from the date upon which the worker last b
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